Soochow Securities: Copper Supply Constraints Persist, Favorable Financial Conditions Boost Commodity Prices

Stock News11-28

Soochow Securities released a research report stating that upstream mining resource availability remains a critical factor, with rising extraction costs and declining ore grades. The firm believes companies with significant resource expansion potential by 2026 and independent development advantages will benefit. Downstream, high-barrier processing firms are favored as copper smelting capacity is expected to remain oversupplied in 2026.

Key views:

1. **2025 Copper Price Volatility with Upward Trend, Reaching Record High** - Copper prices fluctuated between $8,539-$11,068/ton during Jan-Nov 2025, averaging $9,704/ton (+6% YoY), ultimately breaking historical highs. - Price drivers returned to traditional commodity cycles, showing negative correlation with financial factors. A weakening USD after mid-2025 supported prices. If the US enters moderate rate cuts in 2026, low USD could sustain copper's upward trajectory. However, financial crises or slower US rate cuts than peers may pressure prices.

2. **Demand Stability vs. Supply-Side Sentiment Overreaction** - Global refined copper maintained tight balance Jan-Aug 2025, with monthly surplus averaging 8,000 tons. High prices may have dampened demand. - Supply shortages stemmed from mining disruptions and low smelting fees rather than genuine demand gaps. China accounted for 58% of global refined copper demand in 2024 (US: 6%). - China's 2025 demand grew steadily, with copper rod/tube output rising and foil outperforming. Automotive demand accelerated while construction lagged. - Mining costs rose gradually, with concentrate supply growing slower than refined output. COMEX inventories hit records due to US tariffs but shouldn't constrain 2026 prices.

3. **2026 Outlook: Tight Balance Supporting Prices** - Projected 2026 supply: 28.97 million tons (+3% YoY); demand: 29.01 million tons (+3% YoY), leaving a 50,000-ton deficit. - With tightening supply, sustained demand, and supportive financial conditions, copper prices may average $10,500/ton in 2026.

Risks: Weaker-than-expected demand, USD strength, and geopolitical tensions.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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